Stripe will allow businesses to pay their users via cryptocurrencies, starting with Twitter, in the latest sign of how large financial firms are warming to digital assets.
The $95 billion online payments company said Friday it will start offering merchants the ability to make payouts in crypto through the stablecoin USDC, which is issued by crypto firm Circle. Stablecoins are tokens that are pegged to fiat currencies to maintain a stable price. In USDC’s case, as the name suggests, the cryptocurrency is backed by the U.S. dollar.
Twitter will be the first company to integrate the new payment method. Starting Friday, the social media platform — which has been the subject of much talk lately over a potential takeover by Tesla CEO Elon Musk — will let a certain number of creators receive their earnings from its paid Ticketed Spaces and Super Follows features in USDC.
It’s Stripe’s first significant push into crypto since dropping support for bitcoin four years ago. The San Francisco-based start-up stopped accepting payments via bitcoin in January 2018, citing the digital coin’s notoriety for volatile price swings and a lack of efficiency in making everyday transactions.
But the firm has since warmed to crypto amid hype over “Web3,” a movement in tech that calls for the creation of a decentralized version of the internet based on blockchain technology. Stripe last year formed a team dedicated to exploring crypto and Web3. In November, Stripe co-founder John Collison hinted the firm may soon offer crypto support again.
“While the ‘store of value’ aspects of cryptocurrencies typically receive the most attention, we view the prospect of ‘open-access global financial rails’ as being at least equally compelling,” Karan Sharma, product manager at Stripe’s crypto unit, said in a blogpost Friday. “As a result, we’ve been exploring ways to use cryptocurrency-based platforms to unlock broader access.”
The company’s crypto payouts feature will run on the Polygon network, a so-called “Layer 2” solution that sits on top of the Ethereum network to handle transactions faster and at a lower cost. Bitcoin, ether and other cryptocurrencies have faced criticism over sluggish transaction times and high fees.
“We plan to add support for additional rails and payout currencies over time,” Sharma said.
Stripe isn’t the only company opening up its platform to digital currencies — in fact, the company is arguably late to the party. Visa, Mastercard and PayPal and other major payment processors have all announced moves of their own in the space. That was back when digital currency prices were still rising.
More recently, several major cryptocurrencies have slumped sharply from record highs, with bitcoin, the world’s largest, down more than 40% from a November peak of nearly $69,000. Bitcoin was trading at around $39,724 on Friday, according to Coin Metrics data, off by about 6% in the last 24 hours.